Online Payment Options for Government

1. Online Payment Optionsfor Government A Collections Perspective Charmaine Cook, AAP State Cash Manager NM State Treasurer’s Office 505.955.1125 Charmaine.Cook@state.nm.us

2. Agenda • Available online payment options • Payment cost comparisons • E-Check payments • Fee options for card payments • Formula for creating a card payment • PCI DSS responsibilities • Questions

3. Online Payment Channels 1. Credit/Debit Cards 2. E-Checks (ACH Debits) ACH Debits

4. Average Processing Cost - $100 Payment

5. Average Processing Cost - $1000 Payment

6. E-Check Payments • Many online platforms provide Merchants the option to also offer E-Check payments • Cardholder enters bank account # and bank routing #; their account is debited via ACH for payment • Entering account information and initiating payment serves as authorization allowing Merchant to debit the account one time • There are separate bank fees for E-Check payments; no service fee option; Merchant pays fees • Good customer service payment option

7. Fee Options for Card Payments • “No Fee to Cardholder” processing • Convenience Fee processing • VISA Service Fee processing

8. Fee Options for Card Payments • “No Fee to Cardholder” Processing • Cardholder initiates $100 payment $100.00 transaction created • Convenience Fee Added • Cardholder initiates $100 payment $100.00 transaction created • Convenience fee added (sample flat fee of $2.25) $2.25 transaction created • Total charges to Cardholder $102.25 total • VISA Service Fee Added • Cardholder initiates $100 payment $100.00 transaction created • Service fee added (sample of 2.5% fee used) $2.50 transaction created • Total charges to Cardholder $102.50 total

9. Convenience Fee Models • Vendors offer Convenience Fee services with many flavors • Allow merchants to designate a fee to cardholders to help offset the additional costs of accepting card payments • No limitation on transaction types (MCC Codes) • Convenience fee can be set as: • A % of transaction, like 2% of payment amount, or • A flat fee, such as $2.25 per transaction • Funding from Convenience Fees may be credited to: • Merchant services vendor to pay for card processing fees, or • Merchant, who then pays fees to the vendor separately

10. VISA Service Fee Program • For online payments only • Program designated for governments and higher education only • Limited set of transaction types (MCC Codes) are eligible • Merchants sign a separate addenda to Merchant Services Agreement to participate • Merchants are reviewed by VISA and accepted into program

11. VISA Service Fee Program (continued) • Merchant accounts, called MIDs (Merchant ID) • One MID created in Merchant name & tax ID for payments • One MID in Financial Institution name & tax ID for service fees • Merchant is not charged any fees for card payments made under Service Fee Program • Service Fee is always a % of card transaction • Service Fee % is determined by Financial Institution based on Merchant history; strategy is have the service fee cover cost of card transaction

12. Formula for Creating a Card Payment

13. Formula for Creating a Card Payment

14. What is PCI DSS? • PCI - Payment Card Industry andDSS – Data Security Standards • If you accept or process payment cards, the PCI Data Security Standards apply to you. • PCI Security Standards Council • The Council was founded in 2006 by American Express, Discover, JCB International, MasterCard and Visa Inc. They share equally in governance and execution of the Council's work. • The PCI Security Standards Council touches the lives of hundreds of millions of people worldwide. A global organization, it maintains, evolves and promotes Payment Card Industry standards for the safety of cardholder data across the globe. • https://www.pcisecuritystandards.org/pci_security/maintaining_payment_security

15. Determining Factors for PCI DSS • In whose name are card transactions processed? • Merchant name and Tax ID—Government Entity is responsible • Who touches cardholder data? • Merchant, vendors, acquirer • Who stores cardholder data? • Hopefully not the merchant • Does cardholder data pass through your system/network?

16. PCI DSS Prioritized Approach

17. PCI DSS is not just for IT

18. Questions